Brazil Seizes Sheldon Silver's

playbook.  Preet offers to trade President of Brazil and Petrobras employees for Sheldon Silver  et al. + cash.

   

Latin America News
Petrobras Graft Probe Jolts Brazil’s Ruling Party
Top Workers’ Party Official Questioned, as Brazil’s Congress Launches Its Own Probe
Police questioned top party official João Vaccari Neto in São Paulo on Thursday before releasing him. ENLARGE
Police questioned top party official João Vaccari Neto in São Paulo on Thursday before releasing him. Photo: European Pressphoto Agency
By
Paul Kiernan
Updated Feb. 5, 2015 7:27 p.m. ET
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RIO DE JANEIRO—A corruption investigation at Brazil’s state oil company Petróleo Brasileiro SA shook the country anew on Thursday, as Federal Police questioned a top party official and opposition lawmakers opened a congressional probe into the alleged scheme.

João Vaccari Neto, treasurer of President Dilma Rousseff ’s Workers’ Party, was the first major party official to be questioned in the massive, ongoing investigation into an alleged bribery and kickback scheme involving Petrobras, its contractors and Brazilian politicians.

The sheer scale of the alleged fraud also emerged on Thursday when the judge in charge of the case unsealed charges alleging that Mr. Vaccari received, on behalf of the Workers’ Party, an estimated $150 million to $200 million in kickbacks from some 90 Petrobras contracts between 2003 and 2013.
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“We want to know information about donations, legal or illegal, that he solicited, involving people that maintained contracts with Petrobras,” federal prosecutor Carlos Fernando dos Santos Lima said of Mr. Vaccari at a news conference. Mr. Vaccari wasn’t arrested or charged.

In an emailed statement, Mr. Vaccari’s lawyer said his client had “longed for the opportunity to provide the clarifications today presented to the Federal Police,” in order to “thoroughly demonstrate” the falsity of the claims against him.

Thursday’s move by the Chamber of Deputies comes just a few days after legislators elected an Rousseff antagonist, Eduardo Cunha, as speaker.
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Mr. Cunha’s election as speaker adds pressure on her administration, and he wasted no time demonstrating his independence.

“It is a speed that nobody expected,” said Leonardo Barreto, a political scientist from University of Brasília.

Ms. Rouseff has previously said that she believes there was corruption at Petrobras and that the responsible parties should be punished. Petrobras says it is a victim of the alleged scheme.

Because the oil giant is controlled by the state and most of the alleged crimes happened when Ms. Rousseff’s Workers’ Party was in power, the Petrobras case has become a major liability for the administration. The president’s staunchest rivals have called for impeachment proceedings.

A government spokeswoman declined to comment about the pending congressional probe.

Mr. Vaccari was escorted from his home in São Paulo on Thursday morning to the local Federal Police headquarters, according to police and prosecutors. He later left the building in a taxi.

But local media reported—and a police official confirmed—that Mr. Vaccari refused to open his door when Federal Police arrived at his home. The lawyer said Mr. Vaccari understood the escort to be “unnecessary” because he was willing to cooperate.

The documents showing the alleged bribe payments to Mr. Vaccari emerged from a plea deal between federal prosecutors and Pedro Barusco, a former Petrobras manager.

Mr. Barusco hasn’t been arrested or charged. As part of his plea deal, he admitted to receiving $97 million in bribes himself and agreed to pay back all but $1 million that he already spent on trips and “medical treatments.” Mr. Barusco’s lawyer couldn’t be reached to comment.

Mr. Vaccari, through his lawyer, countered that the party “does not have a slush fund or accounts abroad, that it doesn’t receive cash donations and only receives legal contributions.”

The Petrobras case, dubbed “Operation Car Wash” because it started with Federal Police looking into suspected money-launderers operating out of a Brasília gas station with a car wash, has already resulted in dozens of arrests. Among the suspects charged are executives of some of Brazil’s biggest construction companies and several former Petrobras executives.

Prosecutors aim to prove that construction firms conspired to inflate the prices of Petrobras contracts, kicking back some of the illicit profits to company executives and Brazilian politicians. At least one other former Petrobras executive, Paulo Roberto Costa, admitted to taking bribes in a similar plea deal to Mr. Barusco’s, according to court files.

Several such witnesses told a federal judge last year that it was Mr. Vaccari who distributed a share of these payments within the Workers’ Party, according to court documents.

In an emailed statement Thursday, the party said Mr. Barusco’s claims lacked merit.

“They don’t present proof or even signs of irregularities and therefore don’t deserve credit,” the party said. “The accusers will be obliged to answer in court for the lies spread against the [Workers’ Party].”

Petrobras Chief Executive Maria das Graças Silva Foster and five other executives resigned this week in the wake of the scandal, although they all assumed their positions in 2012, after the alleged scheme, and haven’t been implicated. Ms. Foster has previously said she only found out about it when the first arrests were made last March.

Neither Ms. Foster nor Petrobras has made public comments since resigning.

—Rogerio Jelmayer
and Paulo Trevisani
contributed to this article.

Write to Paul Kiernan at paul.kiernan@wsj.com